The S&P 500 has bounced back from the oversold conditions created in early April. The rally from oversold levels has created a weak-looking rally that appears countertrend in nature at this point. The market move has put the index back at an inflection point, and we need to start watching the price action carefully in the days ahead. The equal-weighted S&P 500 is sitting heavy on uptrend support and appears vulnerable to a breakdown in the price action.S&P 500 Equal-Weighted -- Daily Source: MetaStock View Chart » View in New Window »
The internal price action has been a bit more resilient than we would have expected, and an upside resolution is possible, but the weak bounce from the recent oversold condition is troubling for the bulls. The next move in the market should be a bit more dynamic in nature; we expect to see an expansion in volatility in the days ahead. An upside surge would keep the rally intact, but we expect a bearish break of the trend channel that will suggest the market is moving toward a deeper corrective pullback and consolidation of the prior rally....426 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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